Monthly Archives: January 2008

Scruggs Nation, Hood Nation: January 31

I like catch phrases like "Scruggs Nation" and so forth — like any brand name, it signals the consumer what is coming without a lot of extraneous verbiage. I’ve been less successful in thinking of a brand for posts featuring Jim Hood — he’s more of a localized phenomenon than Scruggs, and unlike Scruggs, I have yet to receive conclusive evidence that the "nation" cares about Hood.  So I am trying Hood Nation out today for reader reactions.  Actually, Hood and Scruggs were working as a team for so long that, back in the day, I often thought they should have spun off a line of products to capitalize on their fame under the "Hoodnscruggs" trademark.

One product that came to mind for this Hoodnscruggs brand was a kind of frozen waffle/scrambled eggs type of thing with a celebrity endorsement by, say, John Travolta: "You know, when I’m on the set of a movie, sometimes I have to get up pretty early, and there’s not a lot of time for breakfast.  So I just pop a couple Hoodnscruggs waffleggs in the toaster, and in less than a minute, I’ve got a tasty, nutritious meal, with the syrup I need to get me going in the morning."   I also thought about a set of compact weights for use in the office called the Strongarm — "You need a workout every day, because you never know when you’ll need to put the Strongarm on someone.  The Strongarm office weight set — pumps you up, and works great as a paperweight too.  It’s got a pleasing streamlined look, looks so good people will think you got a new work of art for your office.  The Strongarm — makes you tough, tough as a state prosecutor or a top tort lawyer." Another one — a set of hidden microphones called the Little Squealer, "for your favorite confidential informant." But, I guess the moment has passed.  It wasn’t only to virgins that Herrick was speaking when he said to make much of time:

GATHER ye rosebuds while ye may, Old Time is still a-flying:
And this same flower that smiles to-day To-morrow will be dying.
The glorious lamp of heaven, the sun, The higher he’s a-getting,
The sooner will his race be run, And nearer he’s to setting.
That age is best which is the first, When youth and blood are warmer;
But being spent, the worse, and worst Times still succeed the former.
Then be not coy, but use your time, And while ye may, go marry:
For having lost but once your prime, You may for ever tarry.

So, now that I’ve got that out of my system, let’s make much of time ourselves, and look at some developments in the Hoodnscruggs Nation.

— Oh my goodness, did you see the filing a couple days ago by U.S. Attorney Jim Greenlee, in the Scruggs scandal, of this notice of intent to use evidence of similar acts? The thought popped into my head, how many similar acts are there?

— And yesterday, Judge Biggers denied Scruggs’ request to reconsider Biggers’ prior denial of Scruggs’ earlier request to add to his lawyer harem an attorney who used to represent Steve Patterson, formerly a co-defendant but who has since pleaded guilty in the case. Biggers is a good writer — gets to the point, makes his point and then stops writing.  Here’s an excerpt from his opinion:

Defendant Richard F. Scruggs bases the present motion on his assertion of an alleged Sixth Amendment right to the counsel of his choice, requesting “that the Court give due weight to his constitutional right to counsel of his own choosing.” The primary purpose of the Sixth Amendment right to counsel, however, is to guarantee a defendant the right to effective counsel — not to counsel of his choosing  . . . .

Defendant Richard Scruggs can hardly complain that to deny his motion to approve Mr. Coghlan as one of his attorneys is to deprive him of the assistance of counsel under the Sixth Amendment. Defendant Scruggs has five eminent attorneys of record at present. The court has waived for the defendant the local rule requiring local counsel – a rule not strictly enforced in criminal cases when the court finds a defendant represented by competent counsel from other federal court districts. It would, thus, appear disingenuous for Scruggs to claim that without Mr. Coghlan on his team, he will be deprived of his Sixth Amendment right to effective assistance of counsel.

— Let’s talk a bit about the State Farm v. Hood case.  You know, this case kind of reminds me of something you might see in one of the cruder kids’ movies, where some kid is getting picked on by a tough kid in elementary school, maybe this tough guy, he’s running with some kid version of a gang, say, something called the Hoodnscruggs Gang — you know the dumb names kids come up with.  Well, in one scene of the movie the tough guy is gloating to his gang, and the picked-on kid comes up behind him and pantses him.  Bango!  And everyone laughs as the tough guy is toddling around the school yard with his trousers down around his ankles and his shorts flapping in the breeze. 

There is lots of new activity in the case.  Here’s something that caught my eye: this notice of intent by State Farm to serve a subpoena on Courtney Schloemer, one of Hood’s assistant AG’s, for her attendance at the big row coming on February 6, the hearing about whether the injunction against Hood’s criminal prosecution of the insurer should stay or go.   Schloemer, you may remember, worked with Hood’s grand jury, and according to the Brian Ford notes, she discussed his potential testimony before the grand jury with one of the Scruggs Katrina Group attorneys. (Click here for a post I wrote that has a link to the unredacted Ford notes, the link is about halfway down the post).

Now, you may say so what, it’s debatable about who is using whom in that transaction.  And I will say, I see your point but I don’t buy it — it looks bad, just like it looks bad if what Lee Harrell said in his deposition is true, that Scruggs tried to strongarm George Dale into backing some play to set him up as a Katrina czar with State Farm money, and that Hood was working with Scruggs to strongarm State Farm into settling civil cases through threats of criminal investigation.

Despite what she said about me to Legal Newsline, I have no ill will toward Courtney Schloemer.  I’m sure she’s trying to do her job as she thinks best.  Plus, I dish it out, so I reckon I can take it, too.  I’m a litigator, if I got upset about every instance of someone giving me the skunk eye I’d never get anything done. 

As to that subpoena, it didn’t take State Farm long to transfer its intent into an actual subpoena, which was served on Schloemer at 7:02 p.m. yesterday, it says, IN THE PARKING GARAGE OUTSIDE HER OFFICE.  Dang, you know, when I read this I felt sorry for her, someone laying for you with process, you’re just trying to get in your car and get home.  But of course, she and the Prisoner of High Street have, I’m sure, caused more than a few hearts to flutter by serving subpoenas in similar ways. Your perspective, it all depends on which end of the microscope you’re on. 

The other big news from State Farm v. Hood yesterday is that Hood, who knows what it’s like to get pantsed, is trying to keep his confidential informant from being likewise pantsed in a State Farm deposition scheduled for Friday. Check out the bench memorandum State Farm filed yesterday.  A letter from Hood’s lawyer to the Magistrate Judge is attached as Exhibit A, and an e-mail string involving Scruggs’ attorney, John Keker, is attached as Exhibit B. Hood and Scruggs, together again. Maybe that Hoodnscruggs line of products might sell after all. Waffleggs, anyone?   

By the way, from last Friday, here’s State Farm’s response to Hood’s motion to dissolve the injunction, including all the exhibits that go with it.  One of these exhibits is Exhibit I, Hood’s testimony to Congress in February 2007.  Read it, and ask yourself, should he be making statements like that regarding an ongoing criminal investigation before a state grand jury? 

Here’s a copy of State Farm’s memorandum in opposition, which is much the same as the response linked to above.  



Filed under Industry Developments

Scruggs Nation, January 30

This document, a transcript of the August 18, 2006 hearing before Judge DeLaughter in the Wilson v. Scruggs case, is what I’ve been reading the last few days, when I can grab a few minutes here and there.  I’m in a stretch where blogging time is limited, and I will have more to say about this case and this transcript later, but as the audience for this blog includes a lot of really sharp people who like to read and interpret documents for themselves, I want to put this out in the public domain.  The Scruggs side was argued by Tim Balducci, which will also be of interest to many. 

Two places I will call your attention to:

  1. Look on pages 16-25, where the judge discusses the preclusive effect of a federal ruling in the Luckey case, and finds that the Wilson-Scruggs agreement creates an express trust and a fiduciary duty from Scruggs to Wilson.  Remember that the special master’s recommendation had been denied months earlier — one would think the question of fiduciary duty and express/constructive trust would have to come before the special master’s findings were addressed, not after.  There may be good reasons, for this, of course, that I don’t know about.
  2. Read pages 83 to 120, where the court granted Scruggs’ motion to strike Wilson’s expert and also decided to ignore a $228,000 accounting error that the court’s expert found and to adopt the figures offered by Scruggs’ expert. 

This isn’t the full story of the case by any means, but it makes for some interesting, and curious, reading.



Filed under Industry Developments

Blogging schedule January 30

I’m going to be posting later today, some matters at work kept me busy last night and early this morning and time for blogging was scarce.  I’ve been getting lots of suggestions for posts, some Scruggs related, some Katrina related, some just generally insurance related. I appreciate getting these, but because of my workload and other responsibilities, sometimes it takes me a while to get around to them.  

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Filed under Miscellaneous

Jury awards homeowners $64,000 in Aiken v. USAA, bad faith issue not sent to jury, engineering firm was previously dismissed

It is a major story in Katrina litigation when an insurer goes to trial and doesn’t get shredded by the jury.  By those standards — by any standards, actually — the $64,000 verdict against USAA yesterday in the Aiken case in federal court in Mississippi was a good result for the insurer and a less than satisfactory ending for the policyholders.

The case was somewhat unusual in that Rimkus Consulting Group, Inc., an engineering firm hired to evaluate Katrina wind vs. water damage to the home of David and Marilyn Aiken, was sued along with the insurer.   The Aikens alleged that Rimkus conspired with USAA to commit fraud and change an engineering report that was too favorable to the Aikens.

Allegations that insurers have falsified engineering reports are a standard part of many Katrina cases, but the allegations here didn’t have quite the same steam behind them — USAA paid the homeowners $178,000 in wind damages, unlike in some cases where insurers have paid little to nothing in wind damage for homes leveled by Katrina.  Still, the allegations against Rimkus and USAA were basically the same as those in another case last year involving Rimkus, Weiss v. Allstate, in federal court in Louisiana, where Allstate was pummeled by the jury, which awarded damages of more than $560,000 plus a bad faith verdict of $2.25 million. 

Here’s a post I wrote about the Weiss case in April 2007, and here is a copy of the pretrial order in Weiss, where on pages 7-9 you can see the Rimkus allegations — basically that the initial report was altered to deny wind damage, although Allstate did pay some $29,000 in wind damage.  In both the Weiss and Aiken cases, the insurer also paid, and the homeowners accepted, flood policy limits. 

In Weiss, the homeowners policy provided $343,000 in wind coverage plus a 20 percent rebuilding rider and $240,000 in personal property coverage.  In Aiken, the coverage was similar: $333,000 in dwelling coverage, plus a 25 percent rider for wind damage, and just under $250,000 for contents coverage.   In both cases, the plaintiffs alleged wind destroyed the home before storm surge arrived.

So why the big difference in the result between Weiss and Aiken? The difference in the amount paid by the insurer to the homeowner is one obvious difference, and the fact that the presence of Rimkus as a defendant in the Aiken case may have also made a difference.  In the Weiss case, allegations against Rimkus were not rebutted in the same way as they were in Aiken — in the earlier case, it looked bad to the jury that the Rimkus engineer of record did not visit the site.  That was also true in Aiken, but with Rimkus as a defendant and its attorneys in the courtroom, there was more of an opportunity to explore what this meant — according to those who closely followed the case, even the Aikens’ experts admitted that they had issued reports on property damage without setting foot on the damaged property.  There may, of course, be other factual differences between the two cases I am not aware of, such as the credibility of the wind damage evidence presented by the plaintiffs.

The trial judge in Aiken, Judge L.T. Senter, Jr., last week granted Rimkus’ motion for judgment as a matter of law and dismissed the engineering firm from the case. That had to make an impression on the jury. Here’s a copy of his ruling on Rimkus, which is uncharacteristically lengthy. Whenever Senter goes past 20 pages, it’s news, because often his writing is not just brief; by judicial standards it is downright laconic.  Not saying there’s anything wrong with what he wrote here, mind you, I’m just sayin’.   UPDATE: As pointed out in the comments, I linked to the motion itself, not something written by Judge Senter.  It was late at night when I wrote, had another project due for the Bloomberg insurance publication that was distracting me, I should have known it wasn’t his style.  My bad, apologies to Judge Senter, one of the best judicial writers around.   

Yesterday’s verdict (here’s a copy of the signed jury form) for $64,000 appears to consist of a reversal of some of the depreciation of contents taken by USAA and additional unpaid wind damage to a boat house. Considering that the Aikens were asking for $427,000 in damages plus punitives, the result was a good one for USAA.  Judge Senter did not send the case to the jury on punitive damages because, he said, "there was no substantial evidence that USAA was acting in bad faith."  

Here’s a story on yesterday’s verdict  by Mike Kunzelman of the Associated Press.  Here’s a copy of the Aiken pretrial order.

Here is a story by Anita Lee of the Sun Herald about Judge Senter’s dismissal of Rimkus from the case last week.  Here is an earlier story by Anita Lee on the testimony of Rimkus structural engineer James Jordan. 



Filed under First Party Insurance

Scruggs Nation, January 28

Just some brief items today.  I’ve got some good Scruggs-related documents, but I’ll see if I can get them posted tomorrow.  Monday morning is a wicked time to post, and Monday in January in Portland is even worse.  T.S. Eliot said April is the cruellest month, but I’ll put my money on January every single time.  Incidentally, the poem where he said that, the Waste Land, contains what to me is the most chilling line in literature: "I will show you fear in a handful of dust."  It could mean various things, but one interpretation surely is in keeping with the answer to the question Tolstoy posed in his 1886 short story, How Much Land Does A Man Need?  The answer? Just enough for a grave. Here’s the story’s last paragraph:

His servant picked up the spade and dug a grave long enough for Pahom to lie in, and buried him in it. Six feet from his head to his heels was all he needed.

Throughout this sad Scruggs spectacle, I’ve had occasion to think over the uses of wealth and power, and their ends.  Gray’s Elegy Written in a Country Church-Yard gives one possible view:

The boast of heraldry, the pomp of power,
And all that beauty, all that wealth e’er gave,
Awaits alike th’ inevitable hour:-
The paths of glory lead but to the grave. 

— A reader sent me a link to this 1999 Wall Street Journal story about bizarre goings-on including flying dog poop and gun play at a Dickie Scruggs mansion in Pascagoula.  I think the story’s first paragraph summed it up pretty well.

"I deeply regret and sincerely apologize . . . for the unfortunate incident involving the dog poop shoveled from my yard on May 16, 1999. My conduct was inappropriate as a good neighbor."

Paths of glory, indeed.

— Some misinterpretations have arisen of my previous posts: I am not ceasing to write about Dickie Scruggs, I merely am not going to write a Scruggs Nation post every day.  More of a time commitment than I can commit to over the long haul.  

—   On Friday, Scruggs filed a motion that asks Judge Biggers to reconsider and allow attorney Kenneth Coghlan to represent Scruggs after all.  Click here to read the motion, and here is an excerpt: 

Finally, while the Court is certainly correct that Mr. Coghlan is “not the only attorney in this local area … that would be available to assist Mr. Scruggs[],” Mr. Scruggs believes that Mr. Coghlan is the very best attorney to assist his lead counsel in this matter and respectfully requests that the Court give due weight to his constitutional right to counsel of his own choosing.

In the event that the Court does not permit Mr. Coghlan to enter an appearance on behalf of Mr. Scruggs, the undersigned counsel wishes to notify the Court that counsel intends to consult with Mr. Coghlan on issues related to local custom and practice, jurisdiction, jury selection and other strictly legal and procedural (i.e., non-evidentiary issues) that may be pertinent to the defense of the case but which do not implicate any attorney-client privileged communications or information. Mr. Coghlan will have no role in the trial of this matter and will not render any legal advice or consultation to Mr. Scruggs. Furthermore, Mr. Coghlan will not be consulted regarding the specifics of either Mr. Scruggs’s or Mr. Patterson’s alleged involvement in the conduct at issue in the Indictment.

See Wheat, 486 U.S. at 159; see also Powell v. Alabama, 287 U.S. 45, 53 (1932) (“It is hardly necessary to say that, the right to counsel being conceded, a defendant should be afforded a fair opportunity to secure counsel of his own choice.”)

What is this all about? Some attempt to create an issue for appeal? Gotta believe there are other lawyers Keker could consult with about local practice.



Filed under Industry Developments

Injunction against Hood extended through date of hearing, State Farm notices deposition of Scruggs in Hood injunction case

How bad is it, just how embarrassing is it, for a state Attorney General to get tagged with an injunction by the company he spent months demonizing and investigating? Probably about as bad as: 

  • Having to sit silently in your office for months, and on the few occasions when you do speak, having to pretend to get all excited about going after makers of fake contact lenses and foreign toys.  No matter what they say, no AG wants to be known as Lens Master or The Toy Fighter.
  • Having to keep a blank look on one’s face, stare into the distance and talk about how it looks like rain whenever anyone mentions Dickie Scruggs, Joey Langston or Tim Balducci.
  • Having to find a removal specialist for your tattoo that says "Jim, Tim, Dickie and Joey: Best Friends Forever and Ever!!! Party On!! I will never forget you, dudes!"
  • Dictating the same thing to your Dictaphone again and again and again: "Memo to self — find way to be relevant once more."

Well, as we discussed yesterday, Jim Hood is once again ready for action — he wants to dissolve that State Farm injunction and kick some more insurance company fanny.  Why? Don’t ask why! That’s just how Hood rolls. You might as well ask him about Dickie Scruggs! And you know what the answer would be? That’s right: "It looks like rain." Because it’s none of your business, chump. 

Yesterday, in State Farm v. Hood, here’s what happened.

This order by Judge David Bramlette extended the State Farm injunction through the date of the hearing on Hood’s motion to dissolve it — February 6.

This order by Magistrate Judge Michael Parker orders Hood to appear at the hearing to testify, and also allows State Farm to take the deposition of Dickie Scruggs for use at the hearing "as this witness many be outside of the subpoena power of this court and, therefore, may not be available to testify live at the hearing."  Why wouldn’t Scruggs be available?  Hmmm, what if he pleaded guilty and were in custody elsewhere?  Of course, the reference could simply be to the rules on trial subpoenas, which state that they are enforceable on witnesses only if the witness is found in the judicial district or within 100 miles of the courthouse.  It’s much easier to get a deposition of someone than it is to make them testify at trial.

State Farm lost no time noticing the deposition of Scruggs for February 1.

Lastly, barring some big developments, I probably am reverting to my normal, pre-Scruggs Nation schedule, which means no posts Saturday or Sunday.  Speaking of the Scruggs Nation, I thought this post on the Scruggs Nation, at the Lexis-Nexis Insurance Law Center, was well written, although why anyone would not be fascinated by what is going on with Dickie Scruggs is beyond me.  I mean, here’s Scruggs, a guy who has been to the mountain top, and then, whoops! He slips on the banana peel he himself just threw on the ground, and bounces all the way to the bottom.

The blogger, Tom Hagy, works for Lexis and, full disclosure, I am on the advisory board of the Insurance Law Center and the post is about me.  But that’s not the point — it’s a good, entertaining post.  It’s harder to do than it looks. 


Filed under Industry Developments

Katrina and Scruggs developments, January 24

A few things to catch up on that happened while I was out sick, a few new things.

— First, AG Jim Hood on Friday moved to dissolve the temporary restraining order State Farm obtained against him last year that prohibits him from continuing with his criminal investigation of the insurer.

Hood has been a prisoner of his office for months now, reduced to a sort of Capt. Queeg-like state, mumbling about going after makers of fake contact lenses while clacking ball bearings in his hand.  But apparently he’s decided on a jail break — he’s trying to bust right out of that injunction and get back to where he once belonged, when he was riding high with his confidential informant and the Rigsby sisters.  A real golden oldie, straight from the Nostalgia File.  I half expect to see Hood at a press conference dressed up as Elvis, playing Blue Hawaii on an 8-track player and holding a lighter aloft in tribute to better days gone by.     

I read the AG’s memorandum in support of his motion, and here’s what I don’t get: the point of the memo is that, under the Younger doctrine, federal courts should not restrain state prosecutions unless there is "great and immediate" irreparable injury beyond the normal injury from being prosecuted in good faith.  The AG tries to load up the description of the doctrine so that it sounds impossibly crazy that this standard could ever be met:

The ‘bad faith’ exception, is not merely a finding of bad faith, but rather bad faith joined with harassment, an absence of cause to prosecute, and great irreparable injury. (Memo, p. 7).

It’s not so crazy, though, that all those criteria might be fulfilled.  Aren’t they all just the same thing?  For example, if the Non-Prosecute Agreement Hood signed with State Farm is enforceable, and so far the judge has indicated it is, then there is an absence of cause to prosecute because Hood  contractually waived his right to do so.  Prosecuting someone in violation of an agreement not to prosecute might also be said to constitute harassment and bad faith, and if so, it would certainly also lead to great irreparable injury.  So I saw the brief kind of like someone who comes up to tell you some purportedly outrageous story about the antics of a neighbor, but the story doesn’t deliver the goods and you think to yourself, what’s the point of this and when will it stop?

The government’s January 16 subpoena to the Scruggs Law Firm in the criminal contempt prosecution in northern Alabama is something, isn’t it? The subpoena asks for:

  • All correspondence and e-mails from the firm to Jim Hood or his assistant, Courtney Schloemer, about the Renfroe v. Rigsby lawsuit, Judge Acker’s orders in the case, and the  claim file documents the sisters took.
  • Communications from the law firm to the U.S. Attorney’s Office for the Southern District of Mississippi about the same stuff, plus the False Claims Act "whistleblower" lawsuit called Ex rel. Rigsby (this is the one where the Rigsby sisters claim the right to some fantastic sum as a percentage of blowing the whistle on alleged insurance company fraud).  
  • Copies of all correspondence with the Rigsby sisters and their mother prior to February 2006, when the sisters claim they hired Scruggs as their lawyer for the "whistleblower" lawsuit, and copies of all contracts and agreements between the Rigsbys and Scruggs.
  • Telephone records of calls between the firm and Hood or Schloemer.

There’s a lot more, take a look at it.  Looks like prosecutors are thinking there are some inconsistencies in the version of events offered by Scruggs, Hood, the Rigsbys and others.  Interestingly, they want to further scrutinize Hood’s conversations with Scruggs after Acker ordered Scruggs to return the documents the Rigsby sisters took. Instead, Scruggs and Hood spoke and Scruggs wound up sending his copies to Hood in an attempt to fall under a "law enforcement" exception to Acker’s injunction. (Remember, Hood already had his own copies of the documents and didn’t need Scruggs’).  Here’s a copy of the government’s motion to compel the Scruggs Firm to comply with the subpoena. 

Scruggs’ attorneys yesterday filed a motion to strike the special prosecutors’ motion to compel.  Scruggs claims they have no authority to prosecute him for a variety of reasons that never have made much sense to me — you can read about them yourself in this copy of the motion to strike

— I’m sure I must have linked to this sometime over the last week, but just in case I didn’t, here’s the new scheduling order in USA v. Scruggs (Mississippi Version).  Significant dates include the new trial date of March 31, a March 17 deadline for plea agreements to be submitted, and a February 11 deadline for pre-trial motions. Not a whole lot of time for motion practice, especially considering how many irons Scruggs’ lawyers have in the fire.  Here’s a copy of the official trial notice.

— Now on the McIntosh v. State Farm case. My goodness, when I look at the docket of this case lately it looks like a pit full of snakes, there is some new and nasty motion nearly every day.  I guess I don’t have the energy to describe all these, other than to say if there is a Litigation Hell, this is  what it will look like.    

The case, in which State Farm is seeking to disqualify the remaining firms of the former Scruggs Katrina Group for alleged ethics violations, was going to come to trial February 25, until lawyers for the McIntoshes asked for a continuance.  Judge L.T. Senter Jr. granted the motion for a continuance last week in this order. Looks like the new trial date will be in July or August.

There is a lot of interesting stuff on the docket, one of which is this motion by the Rigsby sisters to quash State Farm’s subpoenas to Dickie and Zach Scruggs on the grounds the subpoenas will infringe on attorney-client communications.  I should also link to this response by Mike Moore, the former Mississippi AG, giving his perspective on his involvement in Katrina litigation, why he is not a member of the SKG and why he should not be disqualified.  A pretty good, lively narrative about his role and involvement with Hood and Scruggs, well worth a read.  It was followed the same day by Moore’s motion to withdraw.

— Lastly, for today, here’s a link to the Mississippi Bar’s latest on the allegations that Steve Patterson, indicted along with Dickie Scruggs, Tim Balducci and others, had been engaging in the unauthorized practice of law.   It’s got a very good timeline, except for one thing — it leaves out the date of the now famous Balducci "man crush" letter.  You want to keep the readers with you through the whole parade, you gotta throw ’em some candy once in a while. 



Filed under Industry Developments

Regular blogging may resume Thursday

I still don’t feel well enough to put in the after-hours, extra energy required to blog at a high level of quality.  Perhaps by Thursday that will change. 


Filed under Miscellaneous

Blogging schedule

As today is a holiday and I’m still ill, I won’t be posting today unless some startling development happens.  Also, and I know this will be disappointing to many, I will be returning to writing about insurance.  Not exclusively, you understand, I’ll still write the Scruggs Nation, but I won’t be devoting all my blogging time to the Scruggs Nation any longer.  I had a lot of time to think about this — I wasn’t able to get out of bed for four days — and while I enjoy the Scruggs posts, I owe it to my family and my own health not to spend every second of my free time on them, which I have for a month and a half.  


Filed under Miscellaneous

Scruggs Nation, Day 54

An excellent story in the New York Times this morning by Nelson Schwartz on P.L. Blake’s connections with Dickie Scruggs and how many people who’ve been targeted by Scruggs over the years are now lining up to whack him like he’s pinata.  Click here for a copy of the story (free registration required to read it).  Here’s an excerpt:

Rather than courtroom victories against the tobacco makers, legal experts say, it was Mr. Scruggs’s ability to put together a coalition of state officials and Washington politicians, while adeptly courting the news media, that ultimately forced cigarette makers to pay up in the landmark $248 billion national settlement.

Mr. Scruggs declined to comment for this article. But his lead defense lawyer, John Keker, says Mr. Scruggs was unaware of any bribery attempts and is completely innocent.

Now, the fate of Mr. Scruggs is being watched closely by advocates of tort reform as well as lawyers and industry leaders, who have all found themselves in his cross hairs over the last two decades. “He stands for the proposition that the halls of justice can become the arena for pressing public policy goals,” says David M. Bernick, a partner at the firm Kirkland & Ellis, who has represented the tobacco industry. “People want to know the reality of how he came to be so influential.”

This is natural, and it’s just going to intensify.  Scruggs’ enemies are going to seek to make his name one of opprobrium, synonymous with one who claims to be protecting the public good but instead manipulates and undermines public institutions for his own good and the good of a gang of outlaws and thugs along for the ride.  And they’ll seek to paint the whole big-time tort bar with the same brush.  Remember that interview I gave the LA Times back in November, about how people would begin to re-evaluate how his amazingly successful man got to be so amazingly successful? It’s not such a hard call to make — even though this was before I heard of P.L. Blake or Joey Langston’s confessed involvement in a scheme to influence the judge in the Wilson attorney fees case.  

Back to Blake.  The story mentions Steve Patterson’s plea agreement hearing, where the government said it had evidence Blake served as some kind of intermediary in the Lackey bribery scheme.  While I was out of the office last week, I asked my secretary to get the transcript of the hearing from the court reporter, and it arrived yesterday afternoon.  Here’s a copy, and here’s the relevant passage about Blake (sorry for the small type, but importing from Abobe Acrobat is unpredictable — I think it’s readable enough):

On September 27th, 2007, Timothy Balducci delivered a

first installment, consisting of Patterson Balducci, PLL C ‘ s

$20,000 to Circuit Judge Henry Lackey. On September 28th,

2007 , Steven A . Patterson and Timothy R . Balducci spoke by

telephone; and unbeknownst to either, the call was being

recorded pursuant to Court order.

Patterson told Balducci that his wife had just gotten off

the phone with " P . L . " – – that being known to the Government as

P . L . Blake – – who had just gotten out of the meeting that

Patterson had asked him to have. Balducci asked Patterson to

call P . L . for details. Patterson called back and related to

Balducci that P . L . had in fact met with Dick Scruggs, and "he"

knows it’ s going to be "40. " Patterson assured Balducci that

P . L . was confident that Scruggs would take care of Patterson

and Balducci. "We got your horse sold" or words to that


On October 7th, 2 0 0 7 , Timothy Balducci called Steven A .

Patterson at approximately 5 :48 p . m . Patterson told Balducci

that he had just talked to P . L . , and that he – – Steve

Patterson – – would be calling "the guy in Oxford tomorrow. "

Patterson assured Balducci that "the guy in Oxford" was

expecting a call. And on the following day, October 8th, at

approximately 8 :17 a . m . , Balducci called Patterson. Patterson

indicated that he was about to call Scruggs.

In a second telephone conversation that same date, Timothy

Balducci and Steven Patterson discussed the firm’ s financial

problems; and Patterson reassured Balducci that, "We’ve got 40

coming from Scruggs" or words to that effect.

On October 10th, 2007, at approximately 8 :55 a . m . , Steven

Patterson called Timothy Balducci and informed Balducci that he

needed to find out when "that order" was going to be signed.

Patterson stated that P . L . needed to know.

Timothy Balducci is expected to testify that on

approximately the 16th of October, 2007, Timothy Balducci and

Steven Patterson were in Oxford to meet with Richard "Dickie"

Scruggs on other matters. When they entered the office,

Richard "Dickie" Scruggs stated, " I know y ‘all have talked to

P . L . , and I ‘ve talked to P . L . Everything’ s fine. Y ‘all are

going to be covered, " or words to that effect. Patterson and

Balducci assured Scruggs that they were there for other


Later that day, after leaving the Scruggs Law Firm,

Patterson and Balducci went their separate ways. However, at

approximately 7 :30 p . m . , Timothy Balducci called Steve

Patterson and told Patterson that he had just spoken with the

judge and that the order would be available the next day. It

was actually two days later, on October the 18th, when Timothy

Balducci met with Circuit Judge Henry Lackey, paid him an

additional $10,000; and picked up a proposed order from Judge


In the meantime, a Court-authorized intercept picked up a

phone call from Richard "Dickie" Scruggs to Steven Patterson at

Patterson’ s residence. Scruggs was inquiring about the

whereabouts of Balducci and the order. Patterson assured

Scruggs that Balducci had gone "south" – – meaning to Judge

Lackey’ s chambers in Calhoun County – – but would hand-carry the

order to Oxford. Scruggs told Patterson to have Balducci put

it on his desk and pick up a package which was ready.

Balducci was surveilled entering the Scruggs Law Firm and

leaving Judge Lackey’ s chambers. Balducci left the order and

picked up a check for $40,000, together with documents designed

to conceal the true nature of the payment. On November 1st,

2007, Timothy Balducci made the final payment of 10,000 to

Judge Henry Lackey.

This part of the transcript quoted above appears to validate this paragraph in the Times story:

At his 2004 deposition, Mr. Langston provided what might be a clearer version of just how Mr. Blake fit into Mr. Scruggs’s operation. “I know that Mr. Blake seemed to be Dick Scruggs’s — his switchboard, I call it, you know. Everybody, not everybody, but a lot of people wanted to be involved with Scruggs on tobacco, and I got the impression that P. L. Blake was kind of a filter for a lot of those people. I also got the impression he was Dick Scruggs’s listening post.”

There is a lot, lot more to learn about all this. 

Another story I saw in the Times, from yesterday, is this Associated Press story  about Judge DeLaughter recusing himself earlier this month from a number of cases to, he said, avoid even the appearance of impropriety. Dickie Scruggs was involved in at least one of the cases, it’s not known for sure how many.



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